Reference no: EM13861891

1. Wu Company incurred $68,200 of fixed cost and $80,600 of variable cost when 2,600 units of product were made and sold.
If the company's volume doubles, the total cost per unit will:

o stay the same.
o increase but will not double.
o double as well.
o decrease.

2. Wu Company incurred $103,600 of fixed cost and $118,400 of variable cost when 3,200 units of product were made and sold.
If the company's volume increases to 3,700 units, the total cost per unit will be:

o $65.
o $60.
o $28.
o $32.

3. Pickard Company pays its sales staff a base salary of $5,400 a month plus a $2.60 commission for each product sold. If a salesperson sells 560 units of product in January, the employee would be paid:

o $3,944
o $1,456
o $6,856
o $5,400

4. For the last two years BRC Company had net income as follows:

	2012	2013
Net income	$82,000	$102,000

What was the percentage change in income from 2012 to 2013? (Round your answer to 2 decimal places.)
o 19.61% increase
o 24.39% decrease
o 24.39% increase
o 19.61% decrease

5. The following income statement is provided for Ramirez Company in 2013:

Sales revenue (2,100 units × $19.60 per unit)	$41,160
Cost of goods sold (variable; 2,100 units × $7.60 per unit)	(15,960)
Cost of goods sold (fixed)	(3,600)
Gross margin	21,600
Administrative salaries	(5,600)
Depreciation	(3,600)
Supplies (2,100 units × $1.60 per unit)	(3,360)
Net income	$9,040

What amount was the company's contribution margin? (Do not round intermediate calculations.)

o $21,600
o $21,840
o $25,200
o $9,040

6. The following information is provided for Southall Company:

Sales revenue	$289,000
Variable manufacturing costs	98,000
Fixed manufacturing costs	62,000
Variable selling and administrative costs	43,000
Fixed selling and administrative costs	38,000

What is this company's contribution margin?
o $48,000
o $86,000
o $148,000
o $129,000

7. The following income statement is provided for Vargas, Inc.

Sales revenue (2,000 units × $19.50 per unit)	$	39,000
Cost of goods sold (variable; 2,000 units × $9.50 per unit)		(19,000)
Cost of goods sold (fixed)		(3,500)
Gross margin		16,500
Administrative salaries		(5,500)
Depreciation		(4,500)
Supplies (2,000 units × $1.50 per unit)		(3,000)
Net income	$	3,500

What is this company's magnitude of operating leverage? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

o 0.26
o 0.21
o 4.71
o 4.86

8. The following income statement is provided for Grant, Inc.

Sales revenue (3,500 @ $14.00 per unit)	$49,000
Variable costs (3,500 @ $6.00 per unit)	21,000
Fixed costs	11,400
Net income	$16,600

What is this company's magnitude of operating leverage? (Round your answer to 2 decimal places.)

o 2.95
o 2.33
o 1.27
o 1.69

9. The magnitude of operating leverage for Forbes Corporation is 2.1 when sales are $130,000 and net income is $17,000. If sales increase by 5%, what is net income expected to be?

o $17,850
o $21,000
o $16,850
o $18,785

10. The magnitude of operating leverage for Blue Ridge Corporation is 3.3 when sales are $210,000 and net income is $37,000. If sales decrease by 6%, net income is expected to decrease by what amount?

o $7,326
o $2,220
o $1,245
o $3,900

11. Wham Company sells electronic squirrel repellants for $47. Variable costs are 38% of sales and total fixed costs are $37,000. What is the firm's magnitude of operating leverage if 1,700 units are sold?(Round your answer to 2 decimal places.)

o 3.95
o 2.42
o 1.63
o None of these

12. What are the expected average quarterly costs of running a consulting practice if fixed costs are expected to be $5,600 a month and variable costs are expected to be $90 per client for each quarter? Expected number of clients for the year are(Do not round intermediate calculations.):

Jan-March	April-June	July-Sep	Oct-Dec
140	170	190	130

o $30,975
o $25,875
o $14,175
o $31,275

13. Yankee Tours provide seven-day guided tours along the New England coast. The company pays its guides a total of $400,000 per year. The average cost of supplies, lodging and food per customer is $400. The company expects a total of 2,500 customers during the period January - June, and a total of 7,500 customers from July through December. Yankee wants to earn $100 income per customer. For promotional reasons the company desires to charge the same price throughout the year. Based on this information, what is the correct price per customer?(Round your answer to the nearest dollar amount.)

o $440
o $580
o $540
o $500

14. Production in 2013 for California Manufacturing, a producer of high security bank vaults, was at its highest point in the month of June when 35 units were produced at a total cost of $550,000. The lowest point in production was in January when only 10 units were produced at a cost of $336,000. The company is preparing a budget for 2013 and needs to project expected fixed cost for the budget year. Using the high/low method, the projected amount of fixed cost per month is:

o $214,000
o $250,400
o $240,400
o $194,000

15. The following income statements are provided for Li Company's last two years of operation:

	2012	2013
Number of units produced and sold	4,600	4,200
Sales revenue	$71,760	$65,520
Cost of goods sold	39,760	36,460
Gross margin	32,000	29,060
General, selling and administrative expenses	18,820	17,540
Net income	$13,180	$11,520

Assuming that cost behavior did not change over the two year period, what is the amount of the company's variable cost of goods sold per unit? (Round your answer to 2 decimal places.)

o $10.50 per unit
o $47.10 per unit
o $8.25 per unit
o None of these

16. The following income statements are provided for Li Company's last two years of operation:

	2012	2013
Number of units produced and sold	3,800	3,000
Sales revenue	$55,860	$44,100
Cost of goods sold	27,000	23,000
Gross margin	28,860	21,100
General, selling and administrative expenses	8,520	7,400
Net income	$20,340	$13,700

Assuming that cost behavior did not change over the two year period, what is the annual amount of the company's fixed manufacturing overhead?

o $8,000
o $16,000
o $17,600
o None of these

17. The following income statements are provided for Li Company's last two years of operation:

	2012	2013
Number of units produced and sold	4,200	3,800
Sales revenue	$63,840	$57,760
Cost of goods sold	43,640	39,540
Gross margin	20,200	18,220
General, selling and administrative expenses	13,780	12,820
Net income	$6,420	$5,400

Assuming that cost behavior did not change over the two year period, what is the company's annual fixed general, selling, and administrative cost? (Do not round intermediate calculations.)

o $13,780
o $3,700
o $3,200
o $12,820

18. The following income statements are provided for Li Company's last two years of operation:

	2012	2013
Number of units produced and sold	3,600	3,200
Sales revenue	$57,600	$51,200
Cost of goods sold	43,000	39,000
Gross margin	14,600	12,200
General, selling and administrative expenses	7,420	6,940
Net income	$7,180	$5,260

Assuming that cost behavior did not change over the two year period, what is Li Company's contribution margin in 2013?

o $41,160
o $15,360
o $18,460
o $14,860

19. Based on the following operating data, the operating leverage is(Round your answer to 2 decimal places.):

Sales	$ 1,250,000
Variable costs	350,000
Contribution margin	900,000
Fixed costs	152,000
Income from operations	$ 748,000

o 0.39
o 1.67
o 1.39
o 1.20

20. Frazier Company sells women's ski jackets. The average sales price is $283 and the variable cost per jacket is $133. Fixed Costs are $1,258,000. If Frazier sells 15,800 jackets, the contribution margin will be:

o $2,370,000
o $3,213,400
o $1,112,000
o $989,400